Russian car dealers to go bust due to drop in sales

April 24, 2014. Russian car dealers are going to go bust, while the home market on the whole is going to consolidate due to a drop in sales, RBC refers to Avtostat's research findings as claiming.

Last year's decrease in sales resulted in 502 companies losing their franchises or giving up on their dealer status, yet 508 new dealers emerged at the same time, the research states.

According to the data published by the European Business Association in early April, some 602,500 automobiles were sold in Russia in the first quarter of 2014, which was 2% less than in the first quarter of 2013.

The owners of small-scale, mono-brand show rooms turned out to be the most vulnerable, while large dealer holdings are going to grow stronger, the agency's experts say. Among the jeopardized businesses are those whose brands sold worse than others: according to the European Business Association, Ford sales sagged the most in Q1'14 (-27%), with Daewoo going through a 25% decrease in sales and UAZ, Ssang Yong, Peugeot, and AvtoVAZ going through a 25%, 19%, 18%, and 15% drop in sales, respectively.

Besides, dealers that launched their businesses immediately before the recession of 2008 broke out, are also at risk, as they have a heavy loan burden.

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